On down the line

By Edward Martin

Their lights looming out of rain and fog, the soot-black engines seem ghostly, save for the tremor they create underfoot. Norfolk Southern diesel 8719 and its twin, 9867, together pump out 8,000 horsepower as they lug a long line of boxcars, tankers and flatcars. Veteran trainmaster Clint Broderick watches as the locomotives gradually disappear into the murky dawn up the track, while far behind, their cars still roll past him. “Probably 132 at least,” he says.

Finally, the last clear the 40-acre tangle of rails that make up Norfolk Southern Corp.’s terminal near downtown Charlotte. Booms echo as massive, remote-controlled yard engines, their handlers walking alongside like mahouts, slam empty cars together to form new trains. Early Amtrak riders arrive at the passenger station. The trappings of commerce are familiar here.

In the 1930s, Allen Gant got a telephone call in Glen Raven, a crossroads outside Burlington 110 miles up the line. The textile executive, a pilot, flew to Charlotte. Waiting in the Pullman car that had carried him from Wilmington, Del., was a brilliant, moody chemist whose new discovery would change what the world wears. Wallace Carothers’ mission made millions for Glen Raven Mills. “The president of DuPont had given him instructions to share the secret of making nylon with Daddy,” says Allen Gant Jr., the current president. The company, founded in 1880, thrived through the Depression and beyond on nylon and other innovations, including pantyhose, which Gant Sr. invented in the 1950s.

Throughout, the Gants have relied on these rails. Their forefathers helped lay them before the Civil War, and trains delivered the coal that fired the massive steam engine that powered the mill. Today, Glen Raven Inc.’s logistics arm moves goods on them. “You put all those dots together,” Gant says, “and it’s going to tell you how important North Carolina Railroad has been to us and the state of North Carolina.” Formally, that’s North Carolina Railroad Co. Most Tar Heels don’t know they own a rail line. It’s the state’s oldest corporation, chartered in 1849. Starting at this gritty rail yard near 12th Street in Charlotte, it’s about as wide as a baseball pop fly but arches 317 miles across the state. It bisects the urban and industrial heartland, traverses miles of farm fields to link some of the largest agribusinesses and spans coastal rivers and bays on bridges barely wider than the locomotives hauling goods to cargo ships at the Port of Morehead City.

The state doesn’t run the trains. Leaseholder Norfolk Southern does, along with Washington, D.C.-based Amtrak for passenger service. But it owns the ground and rails they run on. Alaska is the only other state to do so. NCRR operates as a private corporation and, unlike most state agencies, turns a profit. Five days before Christmas, President Scott Saylor drove to downtown Raleigh from the railroad’s headquarters in an office park to hand deliver a $15.5 million dividend check that the N.C. Department of Transportation will use to improve freight service and safety and for rail-related economic development. “The railroad sets North Carolina apart in competing for new jobs,” Saylor says. “It also generates revenue and tax base at zero cost to the state’s taxpayers.”

Though it has appreciated almost $200 million since 1998, largely through income plowed into improvements, officials and economists are loath to put a price tag on NCRR. “What’s it worth? The question is more than rhetorical,” says state Sen. Fletcher Hartsell Jr., a longtime Republican legislator from Concord who regularly takes the train to Raleigh. “It boils down to asking what Interstate 85 is worth,” referring to the superhighway that parallels much of the railroad’s route through the Piedmont. Using various business formulas, the answer might be anywhere from $500 million to $4 billion. But Hartsell and others say its true value can’t be expressed in numbers.

“It’s part of our heritage,” says former Gov. Jim Martin, a Republican who went to bat for the railroad in the early 1990s. “It’s part of what caused the Piedmont corridor to grow faster than the rest of the state and to become the economic engine it has become.” Now this corridor of history and commerce is at a crossroads. Sixteen years after the state bought out private investors, including the Gants, to become sole stockholder, the railroad’s virtues make it a tempting target. Some legislators eye it as a cash cow that, if sold, they could milk the proceeds to cut taxes. In 2011, a House committee explored the possibility. Members panned the idea, but it didn’t die. A joint House and Senate oversight committee commissioned a comprehensive study a year later. The state shouldn’t sell the railroad, the legislature’s nonpartisan Program Evaluation Division concluded, but tap it for dividends. The check Saylor delivered in December was the first.

Though few fear it could happen, Republican Gov. Pat McCrory’s plans to privatize Department of Commerce functions and outsource Medicaid have revived rumors that a potential buyer — a private-equity investor, most say — waits in the wings. Through a spokesman, the governor declined to discuss the subject, but the idea has long been popular with conservatives. “The argument,” says John Hood, president of the Raleigh-based John Locke Foundation and a Business North Carolina columnist, “is that the state would get a greater return if it went ahead and sold the railroad and invested the money in something else.”

A few blocks from Charlotte’s banking towers, the people running the trains seem oblivious to politics. It’s Monday morning, there’s freight to haul, people to move, and the weather is bad.

THE COMPLEX REALM of the North Carolina Railroad is one of double tracks, single tracks, sidings, stations, crossings and, looming around every bend, high finance. Listen up, says Michael Giles, assistant superintendent of Norfolk Southern’s Piedmont division, as he hands safety vests to Saylor, NCRR Vice Chairman Franklin Rouse and their two companions. “When we’re on the tracks, I want you to undo your seat belts, just in case you have to get out in a hurry.” On this day, like most, this 200-foot-wide corridor stages a carefully choreographed minuet performed by some 60 15,000-ton freight trains — some meeting, others following — while 10 Amtrak passenger trains sashay among them at nearly 80 mph. This morning, a hyrail — a Chevrolet Suburban with retractable steel wheels to ride the rails — joins them. Broderick, a husky Alabama native, drives.

A Norfolk Southern dispatcher breaks radio silence. The trainmaster replies, “Broderick, on Channel 2, over.” He meticulously notes the dispatcher’s instructions. “We’re on Main 2 — that’s t-w-o, until 9:30, that’s nine-three-zero in the a.m., track authority 1079, that’s one-zero-seven-nine …“ On a parallel track a few yards away, a freight train trundles up from behind, exiting the yard, its line of cars doing a slow conga as the corridor funnels four tracks into two. The 3-ton hyrail is a dwarf among leviathans. Sensors in the rails that tell crossing safety arms a train is coming don’t recognize it. Broderick stops at West Sugar Creek Road in northeast Charlotte and waits. Saylor and Rouse watch the stream of automobiles and trucks bumping across. “This is the busiest crossing on the entire NCRR corridor,” Saylor says. “It has more trains and cars than any other on our line.”

Though its bread and butter is freight, the railroad’s value as a passenger conduit between the state’s fastest-growing cities is soaring. Since 2001, NCRR, the state and the federal government have spent millions to speed up the Raleigh-to-Charlotte run, cutting more than 35 minutes and increasing the number of riders about 55%. In 2008, Amtrak added a third daily trip. The railroad recently leased nearly 3 miles of crucial right-of-way paralleling its tracks to the Charlotte transit system, part of a 9-mile extension of the Queen City’s $2 billion light-rail system. By 2017, commuter trains will cross here every 10 minutes at peak times. By then, a $43 million overpass will lift cars over the crossing, with NCRR pumping in about $400,000 for engineering and $10 million toward construction. By 2035, DOT says, 90 freight and passenger trains will pass this way daily, along with nearly 30,000 cars and trucks.

Traffic clears. Broderick honks the SUV’s horn — Norfolk Southern regulation — and eases across. “Clear on track authority 1079, that’s one-zero-seven-nine … “ In the arcane geography of rail, Saylor outlines more improvements to come. To railroaders, this place is Junker. Twelve miles up the line is Haydock, near Concord. By November 2016, this busy stretch will have a second set of rails, allowing oncoming trains to pass without shunting to sidings. As the southbound Amtrak Piedmont slices by on its morning run, Saylor outlines the cost. It will exceed $100 million, mostly federal stimulus money. By 2017, improvements between Charlotte and Raleigh will total $300 million, with NCRR kicking in about $41 million.

The result? Hartsell, the senator and frequent rider who usually boards at Kannapolis, calls hopes for high-speed rail in the vein of Europe’s bullet trains overblown. Most of those have their own corridors and are electrified. That won’t happen here. Nevertheless, improvements planned and underway, he says, will result in higher-speed service, though unlikely ever to exceed 90 mph. The Charlotte-to-Raleigh trip, now about 3 hours and 15 minutes, will drop another 30 minutes, competitive with highway travel.

Saylor, a lawyer who has been the railroad’s president since 2001, says high speed doesn’t necessarily mean quicker trips for passenger trains or for freights, which generally run about 15 mph slower. “We’ll have three, maybe four bridges between Junker and Haydock,” sending heavily traveled roads over — and in one case, under — the tracks. With more than 160 grade crossings between Charlotte and Raleigh plus eight Amtrak stops — Concord, Kannapolis, Salisbury, High Point, Greensboro, Burlington, Durham and Cary — better time is more a political than engineering problem. With the Raleigh-Charlotte fare less than $30, Amtrak is supplanting intercity bus travel, and fewer stops would mean quicker trips. So would merging or closing crossings. But cities would fight to keep their stops, and motorists would complain of having to go out their way to get where they’re going.

As its windshield wipers swish, the hyrail sways on its steel wheels. Conversation lapses into tense silence each time Broderick’s radio crackles new instructions. It takes a mile or more to stop a freight train, and around blind curves sections of single track disappear into fog two football fields away. Dripping, leafless trees close in on both sides of rail beds that, after a century and a half, have carved a sunken path through red clay and rock outcroppings. Miles slide by in short bursts, followed by obligatory stops at grade crossings and horn honking. Unvarnished, the history of industrial North Carolina and its people unfold.

While some crossings handle thousands of vehicles a day, others are no more than muddy driveways to unpainted houses tucked into the woods. Here, both are the wrong side of the tracks, with residents living with trembling walls and warning blasts from horns. Junkyards and heavy industry, along with truck terminals, industrial-equipment yards and cement plants back up to tracks. And graveyards. In China Grove, Green Lawn Cemetery sprawls over a rise above the rails, with markers both modest and monumental. Up the line a few miles, thousands of identical, white marble stones form ranks behind a wrought-iron fence. Salisbury National Cemetery contains the mass graves of between 5,000 and 11,700 Union soldiers. Most died in the abandoned cotton mill Confederates converted into a military prison. Tracing the state’s past and present, the railroad’s route also points to its future.

In Lexington, United Furniture Industries Inc. defies its sector’s decline, steadily expanding, with more than 460 employees making upholstered chairs. Spokesman Bob Cottam credits NCRR in part. Some 200 miles east in Selma, where the corridor is arrow-straight and mostly single track, Bailey Feed Mill Inc. provides pork, poultry and, increasingly, ethanol producers with feed and seed — often from bulk car loads of Midwestern corn. Served by both Norfolk Southern on the NCRR corridor and the north-south lines of Jacksonville, Fla.-based CSX Corp., it has become a rail-based logistics giant, loading and unloading up to a hundred cars at a time. In 2010, Wichita, Kan.-based Spirit AeroSystems Inc. opened a $570 million plant to build jetliner fuselages in the N.C. Global TransPark in Kinston. Like most modern recruiting targets, it had a nonnegotiable requirement: rail service.

DUSK HAS COME and with it, as he does several times a week, railroad enthusiast Michael Giles. Across from Raleigh’s Amtrak station, with its thick, antique oak benches, mists form halos around city lights. “My grandfather lived in Clayton and used to put the mail on the trains,” he says. Amtrak’s southbound Carolinian is behind schedule. Giles, 45, stands on the station platform with a handheld scanner for train radios, seduced by the romance of the rails.

There’s nothing romantic about who owns them, though, and whether NCRR should exist for public good or private profit. They’re pragmatic, complex and politically volatile questions. “The issue of privatizing has been around since the 19th century,” says Hood, who has written about NCRR’s history. Legislation to create a state-sponsored railroad that would tie the Piedmont’s products to eastern markets was introduced in 1833, but it was 15 years before Whigs, who favored public works, pushed a bill through. Determining the route, Charlotte to Goldsboro, was even more divisive, passing by just one vote, shelving a popular, private plan to build a railroad from Charlotte north to Danville, Va., and leading to the election of a Democrat as governor in 1850. The state planned to buy $2 million of the railroad’s stock, with $1 million more offered to private investors. Too few materialized, and the state upped its share to three-quarters, where it remained until about $71 million was spent to buy private investors out in 1998.

Martin, governor from 1985 to 1993, set that in motion. “Private shareholders weren’t a majority, but you have a fiduciary responsibility to them,” he says. If NCRR, for example, spent millions to improve an unsafe crossing, private shareholders could challenge that in court, claiming it didn’t maximize the return on their investment. If the railroad were sold, he adds, conflicts could be magnified. Using that unsafe crossing as an example he says, “A private owner might just leave it like is and buy enough insurance to take care of the accidents.”

Other considerations would be less obvious, such as NCRR’s growing role in economic development and increasingly close ties with the state departments of Commerce and Transportation, after decades of little or no contact. NCRR will soon appoint a DOT representative to its board, Rouse says, and a member of the railroad’s board will join the board of Commerce’s privatized Economic Partnership of North Carolina Inc. DOT has a rail division that, among other things, owns the six locomotives and cars that operates as Amtrak’s twice-daily Piedmont train from Raleigh to Charlotte.

Few deny it would be impossible to replicate the corridor today, 317 miles through 16 counties and the state’s most-expensive commercial real estate, including the hearts of Raleigh, Greensboro and Charlotte. “NCRR is a unique asset,” says Duane Long, chairman of its board. “It’s part of our infrastructure, of what the state’s built on.” His Raleigh-based Longistics LLC, an international logistics company, operates foreign trade zones in the Triangle and Global TransPark, and he will become president of the American Trucking Association this year. “Anybody who’s skeptical about what we do, give us a half-hour. Skepticism comes from not understanding the big picture.”

That big picture, however, includes 17 often-overlooked private short-line railroads in North Carolina. The trains of Aberdeen & Rockfish Railroad Co., for example, have plied 47 miles of track from Aberdeen to Fayetteville since 1892. Those lines often feed freight to Norfolk Southern and CSX, and proponents of selling NCRR say they demonstrate that private ownership is viable.

Some say the railroad’s lease with Norfolk Southern is a sweetheart deal, as was the 99-year one negotiated in the 1890s with the Norfolk, Va.-based company’s predecessor, Southern Railway Co. Signed in 1999, the latest gives Norfolk Southern exclusive freight track rights in renewable 15-year increments, extended in 2012 through 2029. Payments are adjusted, based on inflation and other factors, but are generally about $15 million a year. NCRR officials say critics ignore a central point: You can’t post a for-rent sign on a railroad and wait. Had NCRR and Norfolk Southern failed to reach agreement, Saylor says, federal authorities would have dictated one. CSX expressed interest in sections from Durham to Goldsboro but at what he calls a nominal rate. “We saw no reason to dismember NCRR like that.” Adds Rouse, “So far as I know, there’s been nobody else at the table, just Norfolk Southern and CSX. “

Political pressure has had an effect, though. The railroad owns more than 60 properties, many off the corridor, including those worth about $35 million in downtown Charlotte. Those are covered by long leases that return substantial income and probably are safe from sale, but legislators are likely to nudge NCRR into shedding others. They successfully have pushed for annual dividend payments, which, after the huge initial one Saylor delivered in December, probably will bring $3 million or $4 million to the state. Since the 1998 buyout and under his leadership, the railroad has been on a firmer footing, operating with a lean staff of 13, including property managers and economic developers. The railroad has been profitable since 1999, some years in excess of 25% of revenue, according to John Turcotte, director of the legislature’s Program Evaluation Division.

AS A RAINY NIGHT FALLS on the capital, two mysteries remain. One is the rumor. Hartsell, other members of the legislature and investment analysts have heard it enough to give it some credibility, including speculation that a private-equity investor might leverage the purchase by selling off the noncorridor assets. The other mystery is the whereabouts of the Carolinian, Amtrak’s New York-to-Charlotte train. The lights in the station glow a stark yellow. Train travel is democratizing. In the parking lot, spouses wait in Mercedes. The chief financial officer of a Garner nonprofit and his wife take cellphone pictures of their excited granddaughter, whose mother is coming home on the train. Michael Dick, 57, is from east of Raleigh. Sporting a single small feather in his worn hat and a single tooth in his shy smile, he’s headed to Charlotte to help his contractor nephew remodel houses. “Better than the bus,” he says. “Faster.”

Delayed by a winter storm to the north, the Carolinian, its massive headlight glowering, coasts into the terminal an hour late. “Final call,” tinny speakers announce. On board, bluish-green seats are wide and inviting, and Wi-Fi service is available, but the stainless-steel restroom at the end of the car reeks from its daylong journey. There are 130 passengers, says the conductor, a large, gruff man in blue with a shiny-billed cap. “Had 300 on Thanksgiving.” Softly, the train moves forward. A university professor from Greensboro is absorbed in the draft of a speech on civil rights on his laptop. “Cary,” the conductor says. “Final call.”

Miles roll by. Outside, pinpoints of light become streaks flashing by in the darkness. A faint, hollow sound up ahead mysteriously ebbs and flows — the Carolinian’s horn. Eight minutes out of Greensboro, the train pulls onto a sidetrack, waiting for a northbound Amtrak to pass. A young woman, Charlotte bound, talks softly on her cellphone, then gradually sags into the empty seat next to hers. The heating system hisses quietly; the train rocks. By Salisbury, she’s asleep in a fetal curl. Night now hides the graveyards. It will be past 9 when the Carolinian rolls to a stop in Charlotte, the end of its line. NCRR ends — or, depending upon perspective, begins — here, too. In the morning, the Carolinian will be turned around to begin a new day. So has the railroad on which it rolls.